CAYUGA, N.D. -- Dana and Sandy Banish are in their 50s, but they say their encounter with a dairy their neighbors owned -- and the man responsible for running it -- set them back 10 years financially.
"We're talking about a $1.2 million," says Dana Banish.
That includes some more than $600,000 in principle for unpaid silage, shelled corn and then late fees that were spelled out in contracts.
The Banishes in many ways are a typical North Dakota farming story, accustomed to handshake deals and trust. Dana was born in Breckenridge, Minn., in 1958 and his parents farmed near Milnor, N.D. He was the youngest in a family of nine. He graduated from Sargent Central High School in Forman, N.D.
Sandra "Sandy" Wall, was raised in the Lidgerwood, N.D., area. Her father died in a traffic accident when she was 5. Her mother married her stepdad when she was 12. Her stepdad farmed south of Cayuga, N.D., with her step-uncle.
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Sandy was 14 when she met Dana, then 16, and a classmate of her brother. Dana and Sandy married in 1980 and started farming the same year. She went to barber college in Fargo, N.D., but soon gave that up and chose to be a farm wife. Sandy describes herself as an emotionally upbeat person, seeing the world as a "puppy-dog-wag, kitty-cat-purr" kind of world.
That's changed.
The Banishes rented from her stepfather and step-uncle and eventually took over management. In the last several years, the Banishes have grown corn, soybeans and usually wheat, but not this year. The farm is roughly 2,800 acres. Typically, it's 900 acres of corn and 1,900 acres of beans.
A new buyer
The couple usually had sold their crops through local elevators.
In 2006, 2007 and 2008, however, they sold corn to a new market -- the MCC Dairy in Veblen, S.D., after being approached by neighbor Dennis Pherson Jr. and manager Rick Millner. In 2006, the Banishes sold about 300 acres of corn to the dairy, and in 2007, it went to 600 acres of corn, and 1,000 acres in 2008. Eventually, the dairy was renamed as Veblen East and was managed by Prairie Ridge Management, under the control of Millner.
The 2008 agreement on corn carried a late-fee agreement. They'd contracted corn for about $6 a bushel and the payments were late. The Banishes spoke to Millner, now managing things under the Prairie Ridge Management name. Millner said times were tough for making payments. In late January, they emailed and received few responses. Finally, they received a 30 percent payment for 2008 corn. A large amount still was owed and was covered under a promissory note.
"They never addressed the late fee, which was about $1,000 a day, starting in March 2009," Sandy says.
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In 2009, the Banishes initially agreed on another contract with the dairy, but when they hadn't been paid for 2008 corn, they wouldn't let the dairy chop the 2009 crop.
"Millner couldn't understand it because we were going to get 100 percent of the 2009 contract," Sandy says.
Dana decided it was time to cut the losses. He scrambled to acquire a grain dryer. He and a hired man set it up within two weeks. Prices had fallen. They absorbed costs in ordering seed and other inputs because they were in survival mode.
At the start, the unpaid bills were a shock, even an embarrassment -- certainly not something to talk about.
"We'd never been burned by a facility," Sandy says.
Legal battle begins
In January 2010, the Banishes contacted a lawyer. On March 5, 2010, a receiver was appointed to the dairy. Chapter 11 bankruptcy protected the dairy, so the couple couldn't collect on a promissory note, due Sept. 1, 2010.
Millner came to the Banishes, offering equity in the dairy in exchange for payments. "We said absolutely not," Sandy says. In various meetings with Millner, Sandy would become angry. "He always said, 'Sandy, don't take this to the personal level,'" she recalls, but adds. "This is personal. We pay our bills and we're going to make sure we pay all of our loans. Is it fair? Of course not. That's the state of bankruptcy. Bankruptcy is not fair."
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As the bankruptcies of the Veblen dairies under management of Prairie Ridge Management, unfolded, the Banishes were shocked to see the list of people involved.
"We'd thought it was just a few of us small farmers in our small world," Sandy says.
Sandy started paying for a monthly Internet service to monitor court documents in several venues. She tried to get public officials' attention with the documents, but the story became extremely confusing with the number of entities. She prides herself in staying very fact-oriented, not believing much that's not in black-and-white.
Sandy says neighbors who are substantial investors in the company often address themselves as "victims," in the case, but she notices that none have filed legal actions.
"It makes the relationship very difficult because they don't take ownership of what happened to us. They don't understand that they're on the other side," she says.
Even if the debts are forgiven in a bankruptcy case, she says they still owe her the money. She sees smaller consequences for those who create problems than for those who are truly victimized. She hopes the owners ultimately will not lose their farms, owing on personal guarantees.
The Banishes expect to move ahead, farm, grow their products and sell them. They want to get paid. But living in the Veblen/Cayuga area never will be the same, Sandy says.
Some of the owners have gone on to have further business dealings and partnerships that are closely linked to Millner.
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"To share emotional interest with a person who made our situation the way it is -- the friendships once had -- I believe will never be able to recoup," she says. "The friendships are dead."
